EKONOMI SUMBERDAYA AIR Topik 5. Water Valuation: Irrigation Water Yusman Syaukat Departemen Ekonomi Sumberdaya & Lingkungan FEM - IPB

Value & Price Value ≠ Price The value a person assigns to a good is related to his/her preferences. It is a subjective and individual process. Price is market value or value in exchange, which is determined through the interaction between demand and supply in the market. Pricing of water resources is problematic since water market is generally non-existence

Water Valuation Pearce (1993): “There is no activity that can be properly called ‘valuing water’”. They actually try to assign monetary measures of individual’s preferences for outcomes of policy proposals or events. For examples: improvement of water supply, quality, or reliability; environmental public good; degradation of water sources

Types of Water Valuation Valuing water as an input in producers’ good context, such as agriculture and industry Valuing water in municipal uses Valuing water as environmental public goods

Water as an Agricultural Input

Issues of Water Issues yang harus diperhatikan: Long-run or short-run models? Water as a Variable or a Fixed Input? At-site (place of use) or at-source (at the location where the water is obtained) measure? Private or Social Prices?

Basic Concept Perkiraan nilai ekonomi (benefit) dari suatu producer’s good yang tak ber-harga (unpriced) – air - dilakukan dengan isolasi kontribusi dari air dari input lain terhadap nilai total output yang dihasilkan  Teori Economic Rent Teori yang relevan: Value of Marginal Product (dengan asumsi air sebagai variabel input)

Basic Residual Method Residual (imputation) method merupakan metode deduktif yang umum digunakan untuk memprediksi nilai VMP Pendekatan yang biasa digunakan: Product Exhaustion Theorem Theory of Economic Rent

1. Wicksteed’s Product Exhaustion Method Asumsi: Product Exhaustion Method: Karena: VMPi = Pi Maka: Sehingga:

Tabel 1. Rata-rata Nilai Air Irigasi menurut Lokasi dan Musim Wilayah MT I MT II MT III Water Rent (Rp/Ha/MT) - Hulu 554.760 366.043 1.388.742 - Tengah 413.832 245.401 1.024.310 - Hilir 299.957 172.637 738.302 Nilai Air (Rp/m3) 38 26 68 28 17 50 21 12 36

2. Theory of Economic Rent Assuming producer is a price taker: TR = Y PY Profit Maximization Condition: P = MC TVC – total biaya penggunaan input variabel (a) TR - TVC = sum of rents and quasi-rents Economic Rent = payment made to an input over and above the amount needed to extract any of that input into its present employment Quasi-Rent (QR) = total payment to fixed factors (b) RNW = non-water related rents (b) RW = water related rents = rents that derive from the use of water in production (c) TR= TVC + QR + RW + RNW RW = TR – TVC – QR - RNW

Economic Rent MC ATC Py c ATCo b AVC AVCo a Yo

Change in Net Rent Method Ketika penggunaan suatu input dirubah, maka akan menyebabkan perubahan pada penggunaan input lainnya. Misal: ketika ketersediaan air meningkat, maka akan membuka peluang bagi petani untuk meningkatkan penggunaan pupuk, pestisida, atau bahkan tenaga kerja. Producer’s WTP for an increment of an input is the change in net producer income or value of net rent associated with that increment Net Income (Z): Suppose, there is an increment of water supply, which causes changes in Net Rent:

Change in Net Rent Method (2) Net income per unit of water (∆W): ∆Z/∆W = change in net rent associated with an increment in water use.

Mathematical Programming Model Math. Programming dapat digunakan untuk mengukur benefits dari perubahan dalam penggunaan sumberdaya air dalam suatu proses produksi (pertanian atau industri) Output: change in net rents – WTP for an increment or decrement of an unpriced producer’s input. Objective function: Max f(π,X) Constraint: A’ X ≤ B B = vector constraint of production inputs, incl. water Parameter πi is usually a measure the marginal net rent to water in activity Xi